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While today’s labour market data showed that Korea’s unemployment rate rose in July, the details of the report are encouraging. In addition, we believe that the policy rate is not the appropriate tool to address concerns over the flagging housing market …
11th August 2010
The Bank of Korea (BoK) meets on Thursday and the question is whether its policy rate will be hiked for the second month in a row. Developments since the previous meeting have been broadly positive, while concerns over the housing market are best dealt …
9th August 2010
Indonesia’s GDP growth accelerated to 6.2% y/y in Q2. We expect continued strong growth in coming quarters, led by domestic private sector demand. We maintain our forecast that monetary tightening will begin in Q4 and that the rupiah is likely to …
5th August 2010
The Reserve Bank of Australia (RBA) held its cash rate at 4.5% today, as was universally anticipated. We expect the mining boom to bring above-trend GDP growth over the next few years and there is already little spare capacity in the economy. The upshot …
3rd August 2010
The Reserve Bank (RBA) meets on Tuesday and is almost certain to keep its policy rate on hold at 4.5%, given that Q2 consumer price data were softer than expected. Nonetheless, the mining boom will bring above-trend GDP growth over the next few years and …
2nd August 2010
Manufacturing PMIs for emerging Asia and Australia were a mixed bag in July. The world economy is shifting onto a weaker track as policy stimulus is removed, which in turn means that Asia’s industrial output growth is likely to slow in the second half of …
Pakistan’s central bank (SBP) today lifted its discount rate by 50bp to 13.0%. The move was a surprise but a rate hike has been the big risk for some time given double-digit inflation and the large over-run on the budget deficit target agreed with the …
30th July 2010
Bank of Thailand (BoT) monthly indicators for June have confirmed that the economy has bounced back strongly, which is what we always expected would be the case. Exports and manufacturing should continue to lead the way despite the global slowdown, while …
The Fitch downgrade of Vietnam’s foreign currency debt, announced today, was no surprise. Over the last six months domestic policies have see-sawed between fighting inflation and boosting growth while the balance of payments, although on a improving …
29th July 2010
The Reserve Bank (RBNZ) lifted its cash rate by 25bp to 3.0% overnight, as expected. Exports should remain a bright spot but domestic indicators have been softer than anticipated by the RBNZ and will probably continue to disappoint. The tightening cycle …
The Reserve Bank of India (RBI) increased its two key policy rates today, as was expected. The economic upswing looks set to stay strong and high inflation has now developed into a big political problem as well as a major policy challenge. Rates are …
27th July 2010
GDP growth in Korea probably slowed in Q2 and is likely to stay on a weaker track in coming quarters. The economic upswing should not come under serious threat, but exports and manufacturing growth will almost certainly ease due to the tougher conditions …
26th July 2010
Bad news on the budget deficit has trickled through in recent weeks and there is scepticism about the Philippine government’s ability to limit the shortfall to its new (upwardly-revised) target for 2010. Nevertheless, the slippage is small relative to the …
Korea’s GDP growth slowed in Q2 and is likely to stay on a weaker track in coming quarters. The recovery is unlikely to stall and we still expect the Bank of Korea (BoK) to lift its policy rate in August by 25bp to 2.5%. But rate hikes in the current …
Economic growth in New Zealand will probably fall short of what the Reserve Bank (RBNZ), and the consensus, currently expect. The cash rate is virtually certain to move up this week but the tightening cycle may not go on for much longer. The Kiwi dollar’s …
Industrial output has soared across Emerging Asia since the first half of 2009, but the rapid expansion will not be sustained. The inventory-rebuilding cycle has now largely worked its way through and the global economic upswing will almost certainly …
19th July 2010
Since May, foreigners have returned to being large net buyers of all the Asian stock markets where flows data are available, with the exceptions of Thailand and the Philippines. We continue to expect that capital inflows will climb over the long run. …
It was announced over the weekend that Australia will hold Federal elections on 21st August. The main campaign issues will be the mining tax, climate change policy, and the stance toward asylum seekers. The strong economy points to the ruling Labor Party …
The Philippines’ central bank (BSP) kept policy rates on hold at 4.0% today. This was expected by the consensus although we had thought there might be a hike. The economic upswing should stay on track but the policy rate is already relatively high while …
15th July 2010
Recent India data show that inflation pressures remain acute and that the economic upswing is still broadly on track. Further monetary tightening is only a matter of time. It is almost certain that the Reserve Bank (RBI) will lift its two key policy rates …
14th July 2010
The Bank of Thailand (BoT) raised its policy rate by 25bp to 1.5% today, as expected. The social unrest has inflicted little damage on the economy while inflation is set to rise. Today’s move is not a one-off adjustment and the rate hikes to come will …
Preliminary Q2 GDP data from Singapore, released today, were stunningly strong yet again. Economic growth will ease during the rest of 2010 but domestic demand should limit the downside. The Singapore dollar will probably climb further against the US …
The best of the rebound in exports and manufacturing has now come through and GDP growth across Emerging Asia looks set to slow in Q3 as the global upswing loses some momentum. Asia’s trade-dependent economies will inevitably suffer the most but the …
13th July 2010
The Bank of Thailand (BoT) meets this week and we, like the market, expect that they will move the policy rate up by 25bp to 1.5%. The social unrest in April-May appears to have inflicted little long-term damage on the economy, which we always thought …
12th July 2010
Bank Negara Malaysia (BNM) raised its policy rate today by 25bp, as we had expected. Today’s move shows that the authorities see the local economic upswing as being sustainable and likely to stay strong, despite the increase in the external threats. This …
8th July 2010
The Reserve Bank of Australia (RBA) held its cash rate at 4.50% today, as expected. The external risks have increased but the RBA is still upbeat about the local outlook. GDP growth is forecast to stay at trend or better over the next 12 months while …
6th July 2010
Bank Indonesia (BI) left rates at 6.50% today, as expected. The economic upswing will stay strong but the high level of the rupiah is helping to hold down prices. Nevertheless, inflation will probably accelerate in the second half of 2010 and we expect …
5th July 2010
The Bank of Korea (BoK) meets this week and the decision whether to hike or not looks to be finely-balanced. We expect the policy rate to be unchanged at 2.0%, although the chance of a July move is significant. The policy rate is extremely low, the …
Today’s unscheduled Reserve Bank of India (RBI) rate hikes are a sensible and not unwelcome move. India’s economic upswing is strong and price pressures are already uncomfortably high. Further monetary tightening is only a matter of time. We expect the …
2nd July 2010
Manufacturing PMIs in emerging Asia and Australia moved lower in June. The recent explosive growth in industrial production will inevitably slow in coming months as the boost from inventory re-building begins to fade and the global recovery loses …
1st July 2010
Bank of Thailand (BoT) monthly indicators for May suggest that the hit to the economy from the violence in Bangkok has not been too severe, which is what we expected would be the case. Exports and manufacturing should continue to lead the way, while …
A so-called Economic Co-operation Framework Agreement (ECFA) was approved yesterday between Taiwan and China. The deal should increase trade and for Taiwan there are two major implications. Firstly, Taiwan will no longer be marginalised as free trade …
30th June 2010
The Bank of Korea (BoK) released its latest annual estimates of the North’s economy late last week. In short, the North-South income gap remains massive. The shift away from free market reform in the North and its frostier relations with the rest of the …
29th June 2010
Strong April-May industrial output data suggest that Singapore will post another stunning q/q annualised GDP gain when the Q2 figures are released by mid-July. Even Singapore cannot keep this up but the inevitable slowdown later this year, at its worst, …
Vietnam data published over the next few days will almost certainly confirm that the economy has picked up speed and is now expanding close to the government’s target pace of 6.5% y/y. It is likely that GDP growth will rise further in the second half of …
28th June 2010
International investors should not be concerned by the change of prime minister even though, by Australian standards, the events of this week have been unprecedented. Data on population trends, which has also come through in recent days and have gone …
25th June 2010
Data released overnight showed that New Zealand’s economy expanded again in Q1, albeit at a slower pace than at the end of 2009. The recovery should not come under serious threat in coming quarters but is likely overall to be sluggish. Deleveraging in the …
24th June 2010
The delay in implementing a new value added tax has soured relations between Pakistan and the IMF and means that the capital inflow needed to shore up the balance of payments will be slow in coming through. Accordingly, the depreciation of the rupee will …
23rd June 2010
The shift to de-peg the renminbi against the US dollar, announced on Saturday, will probably bring further FX rate appreciation across Asia, even though China is likely to move slowly from now on. The Singapore dollar, Malaysian ringgit and Korean won …
21st June 2010
New Zealand’s GDP looks to have expanded in Q1, albeit at a slower q/q pace than at the end of 2009. The recovery should not come under serious threat in coming quarters but is likely to be sluggish compared to previous rebounds. Deleveraging in the …
Indonesia yesterday joined the regional trend and introduced new measures designed to reduce the volatility of capital flows and encourage foreign investment in longer term financial instruments. The move is a sensible response to a challenging economic …
17th June 2010
Data published over the last few days have been mixed but the Philippines economic recovery still probably stayed strong in Q2. Fiscal consolidation can proceed slowly and the expansion will almost certainly remain on track despite the external threats. …
Curbs on capital flows recently announced in Korea are designed to reduce extreme swings in the won and are not an attempt to influence where the currency will move over the long run. Korea is a special case but other countries will also use capital …
15th June 2010
Data from India released today, and late last week, showed that inflation pressures have picked up again while the economic upswing has stayed strong. Further monetary tightening is only a matter of time. It is virtually certain that the Reserve Bank …
14th June 2010
Malaysia’s latest plan to boost its competitiveness, announced last week, looks realistic and achievable. Effective implementation of the new reforms will be key. But the target of lifting GDP growth to 6.0% in 2011-15 does not look too ambitious, even if …
The Bank of Korea (BoK) left its policy rate at 2.0% today, as expected. The turmoil in the markets and the European debt crisis weighed heavily in the decision to stay on hold. However, the local economic upswing should not come under serious threat, …
10th June 2010
The Reserve Bank (RBNZ) earlier today lifted its cash rate by 25bp to 2.75%, as expected. The local economic upswing should continue, despite the increased external risks, but the recovery will probably be more sluggish than is usual. The cash rate looks …
The threats to the emerging Asia economic upswing have increased, but we believe that the problems in Europe and the turmoil in the markets will not escalate to a level which derails the region’s recovery. Moreover, we judge it most likely that China will …
Pakistan’s annual budget, which was announced over the weekend, aims to narrow the budget deficit by one-two percentage points of GDP by mid-2011. While GDP is likely to accelerate and lift tax revenues, we believe that a new IMF programme will almost …
7th June 2010
Korea’s central bank meets on Thursday and is likely to keep its policy rate on hold. The Bank of Korea (BoK) will probably wait for market volatility, stemming from an escalation in tensions with North Korea and fiscal concerns in Europe, to calm before …
